The price of Bitcoin recently reached a new all-time high of $123,565, after the S&P 500 index recorded a new all-time high of 6,457.
The rise of Bitcoin occurred a day after the US CPI index for July showed inflation remained stable at 2.7% year-over-year, unchanged from June and lower than the forecast of 2.8%. The data showed the overall CPI index increased by 0.2%, compared to an increase of 0.3% in June.
After the report was released, the CME FedWatch tool indicated that market probability for a rate cut at the Federal Reserve's meeting in September rose to 93.9%.
Long-time cryptocurrency investors note that rate cuts from the Fed and a shift away from quantitative tightening typically benefit Bitcoin's price volatility historically. Many also predict that implementing President Donald Trump's economic program, outlined in 'One Big Beautiful Bill,' will lead to increased spending, inflation, and risk-seeking in financial markets.
Capital flows into Bitcoin and Ether ETFs also attracted the attention of investors, contributing to the optimistic sentiment across the market. Farside Investors' X account indicated that the net capital flow of the BTC ETF reached $65.9 million, while the ETH tool recorded $523.9 million in share purchases on Tuesday.
On Tuesday, the ETH ETF recorded capital flows reaching $1 billion for the first time. While the net capital flow of the Bitcoin ETF has slowed somewhat, it still recorded $1.02 billion in capital flows since Friday. The cumulative impact of ETH's success is clearly boosting positive sentiment across the price of Bitcoin and altcoins.
Data from Hyblock's liquidation heatmap shows that Bitcoin has passed a short liquidation cluster starting from $122,500, with the potential for the next forced position closure extending up to $124,000.
According to information from CoinGlass, nearly $2 billion in short positions are at risk of being liquidated if traders push the price of BTC above the liquidity cluster from $122,800 to $125,500.
Bitcoin's strong growth has pushed its market capitalization beyond $2.45 million, while the total cryptocurrency market capitalization currently stands at a record $4.15 million.